Chalice investors race for exits

afr.com:

Chalice Mining boss Alex Dorsch has defended the use of high commodity price assumptions in a scoping study that sparked a 27 per cent crash in the company’s share price during morning trade on Wednesday.

The study provided a long-awaited look at the economic opportunity that lies beneath farmland at Chalice’s Gonneville deposit, which has been touted as one of Australia’s best critical minerals discoveries for its platinum group elements, nickel and copper.

Chalice managing director Alex Dorsch says supply and demand for critical minerals will soon be “transformed”. Trevor Collens

Release of the study after the close of trading on Tuesday triggered a massive sell down of Chalice shares when trading commenced on Wednesday.

Investors looked past the promise of a two-year payback on a mine costing between $1.6 billion and $2.3 billion to instead focus on lower than expected production of nickel.

Some investors were also concerned that Chalice had based its economic forecasts on commodity prices well above current prices.

Palladium is expected to provide about 55 per cent of revenue from the mine, and Chalice’s study assumed the metal would fetch $US2000 an ounce over the life of the mine.

Palladium was fetching $US1218 an ounce on Wednesday, with the price down 30 per cent since January 1.

Chalice’s study assumed nickel — the metal that would provide 24 per cent of revenue from the mine — would fetch $US24,000 a tonne over the life of the mine; the current price is just below $US21,000 a tonne.

The study assumed copper would fetch $US11,000 a tonne during the mine’s life, rather than the $US8300 a tonne on offer this week.

Chalice’s forecast for platinum prices to average $US1000 an ounce were closer to Wednesday’s price